We’ve got a great track record of paying our rents and a great operations team, great relationships with our brokers and with our – with the national REITs that are out there, and that’s something that’s important to us, and we pride ourselves and we continue to invest time to make sure that we’re nurturing those relationships and keeping that market open for us.
John Lai: Yes. Jed, if you’re going to underwrite a project, you’re going to underwrite a project with a company that has a strong track record, a great management team and a long history of doing it right, and I think we check those boxes.
Chris O’Cull: Yes. No, that makes sense, okay. Just also, I mean the company has seen declining retail traffic for several consecutive quarters now. And I’m just wondering, if you guys have completed any consumer research to try to understand the root causes of the softness. And I know that the – I believe the industry has been soft as well, and I’m just wondering if there’s any kind of discussion with any other companies? And just in terms of what’s driving or what do you guys think is driving this retail softness?
John Lai: Yes. So Chris, this is John. We don’t have a consumer study that we can point to. There’s a lot of theories you know. One of my beliefs is that as an industry, there’s been – a lot of folks have been pushing the pricing envelope relatively aggressively, and at certain points this is not a completely inelastic service that you could – at $12 or higher for a base wash, it’s going to have an impact on retail frequency. And again, I think we have been very prudent in our approach and relatively conservative in not being overly aggressive in pushing that pricing envelope, and as a result we’re happy with that, but I think that has had some effect, and that’s just my theory.
Chris O’Cull: Great. Thanks guys.
Operator: Thank you. And the next question comes from Tristan Thomas-Martin with BMO Capital Markets.
Tristan Thomas-Martin: Hey, good afternoon. Tristan on, first, and then just two questions. There’s been a lot of, obviously talk about the competitive landscape and how more competitive it’s gotten. But now the people are starting to pull back. Does that create any specific opportunities for you?
John Lai: Absolutely, 100%. So I would say that right now people are being much more calculated and measured and really focusing on growing their existing footprints than expanding into new markets. We’re definitely seeing less encroaching than we have in the last couple of years, which is good and healthy. So we anticipate new unit growth to moderate, and we’re actually seeing some platforms pair back on their growth plans for a variety of reasons, but primarily its access to capital. So in the end, as we look at multiples that are starting to come down, and it feels like the market right now is reset to about a 10x number, which literally two years ago things were trading at north of 15x. And there’s also more of a focus, which has been our focus from the get-go on quality versus quantity, because for a while during the craziness over the last several years, there were certain platforms that were all about scaling just to scale and buying whatever they could, and the chicken is coming home to roost, if you will.
So we, like others, are being cautious and measured, and this will create a number of opportunities for us as an organization, but we’re going to be very disciplined and highly selective in choosing when and where to pull the trigger on M&A.
Tristan Thomas-Martin: Okay, thank you. And then just, you mentioned the macro is softer. If it continues to get worse, what is the Mister Car Wash recession playbook?
John Lai: Well, I’d start with you know, we have super strong AUVs right now, really healthy margins. We run a tight ship. We have a staffing model that we’re really proud of, but we do err on the side of – and there’s a right – there’s the idea around right staffing, running lean and running too fat. And higher-volume stores, it’s actually easier to operate a higher volume store than it is a lower volume store, but what we’re doing is making material investments in people in the human capital front. We have over 150 MITs in our pipeline that are part of our operating expense line and we’re happy to make that investment, because it’s going to be the future for our organization is these high-potential future leaders running the stores that we have in our pipeline.
So if stuff hit the fan and things got really tight, we could pull back on some of those levers. And it may mean a temporary slowdown for us, but I think we’d be able to weather the storm. So last thing I’d just add on that, we have managed – so we’ve been around for 25 years. We have managed through multiple economic cycles and have emerged stronger, quite frankly, from each one. And so we don’t anticipate – we believe that we’ll be able to manage through this one as well as we’re managing through it, and we’re going to emerge just fine.
Tristan Thomas-Martin: Great. Thank you.
Operator: Thank you. And this concludes the question-and-answer session. I would like to turn the floor to management for any closing comments.
John Lai: Well, thank you everybody. As Car Wash Operators, we love what we do, we love who we serve, and we feel very fortunate to be a leader in this space that’s grown year-over-year. We look forward to checking back with you guys on the next quarterly call. Thanks everyone for joining.
Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation and you may now disconnect your lines.
